Electricity Regulatory Commission begins work to formulate directives


Jun 12, 2019

The newly formed Electricity Regulatory Commission has begun work to formulate directives to govern the electricity market. According to commission officials, it is currently preparing an interim directive laying down the rules for power generation and trade in the country.

“We are holding stakeholder discussions to gather information about the issues being faced by the parties and preparing a governing document which will set the course for the energy sector in the upcoming days,” said Ram Prasad Dhital, member of the regulatory body. “We will first publish an interim directive and revise the document after the stakeholders have reviewed it before enforcing the rules.”

The Electricity Regulatory Commission was established to oversee power generation, transmission, distribution and trade. The Electricity Regulatory Commission Act 2017 authorises it to implement a code of conduct pertaining to grid development and power distribution, set the power purchase rates and introduce competition in the electricity market.

According to Dhital, the commission is currently engaged in creating a grid and distribution code of conduct, forming rules concerning initial public offerings by hydropower companies, and analysing the various tariffs in line with the provisions of the act.

Independent power producers–who have long been complaining about monopsony and unfair market practices as the Nepal Electricity Authority is the only off-taker of power and is itself a producer–met commissions members on Tuesday to press for the introduction of a multi-buyer electricity market.

The lobbying by the Independent Power Producers’ Association comes a week after Commission Chair Dilli Singh informed stakeholders about its plan to issue power sector directives.

“We discussed issues plaguing the power sector with commission officials, and called for the introduction of laws that would allow multiple buyers and sellers to exist in the power sector,” said Kumar Pandey, vice-president of the association. “The power sector must be a level playing field for the parties involved; but currently there is only a single buyer which is itself a power producer, and that is against the norms of a fair market.”

Previously, in the absence of a regulatory body, the state-owned power utility had been fixing the power purchase agreement rates with independent power producers. But after the formation of the governing authority, its office bearers must approve the power purchase agreement and its terms.

But for lack of guidelines and directives, the commission has not been able to approve the power purchase agreements that have been put on hold for over a year by the Nepal Electricity Authority since the formulation of the act.

“There are potential power producers who are waiting for their power purchase agreements and approvals to build hydel plants with a combined installed capacity of 6,000 MW,” said Kulman Ghising, managing director of the Nepal Electricity Authority. “Following the formation of the commission, it is now up to it to pave the way for these independent projects.”

Commission officials said the interim directive would address the concerns of both the power utility and independent producers.


Source: The Kathmandu Post